Good Morning, Noble Managers! It’s Wednesday, June 25.

Topic: Business Strategy | VARS Framework | PESTEL Analysis
For: B2B and B2C Managers.
Subject: Strategy → Practical Application
- Concept: Use the VARS framework and classic tools to operationalize strategy
- Application: Align internal capabilities with external realities for sustainable success

Don’t keep us a secret. Share this newsletter with friends (copy URL here).

TL;DR:

Why strategy fails: Misalignment between internal plans and external realities
How NVIDIA used VARS to drive $30B in AI revenue
Fix it fast: Use the VARS Scorecard and PESTEL to build a winning strategy

Introduction

In fast-moving markets, the best managers aren’t just thinkers, they’re translators, turning strategy into action.

In 2025, with AI reshaping industries, tariffs up 25%, and consumer confidence falling, aligning internal strengths with external realities is non-negotiable.

The VARS framework, paired with tools like PESTEL, helps you do just that.

Companies with clear strategies outperform their peers in profitability.

Let’s build a playbook to operationalize strategy so you don’t just survive—you thrive!

Why Strategy Wins: NVIDIA’s $30B AI Pivot

In 2024, NVIDIA faced a shifting landscape: explosive AI demand, but also rising competition and regulatory scrutiny on tech.

Their initial focus—selling GPUs for gaming and data centers—wasn’t enough to sustain growth.

Using a VARS-like strategy, they pivoted:

Value Proposition (V):

Shifted from “best GPUs” to “end-to-end AI solutions,” offering hardware, software (e.g., DGX Cloud), and services for enterprises.

Activities, Resources, Capabilities (A):

Doubled down on core competencies like chip design and AI software development, partnering with hyperscalers like AWS.

Realized Value (R):

Captured value through high-margin GPU sales and new subscription models for AI software, boosting margins.

Scope (S):

Expanded into enterprise AI markets (e.g., healthcare, autonomous vehicles), targeting high-growth sectors.

NVIDIA’s pivot, informed by a PESTEL scan (e.g., technological trends, regulatory risks), drove a 122% revenue increase to $30B in Q2 FY2025, solidifying their AI leadership.

Strategy isn’t theory—it’s execution.

Strategy 101: The VARS Framework

Developed by Professor Deepak Somaya, VARS breaks strategy into four components:

V: Value Proposition – What unique value do you deliver? (e.g., NVIDIA’s AI solutions)
A: Activities, Resources, Capabilities – What do you do, and what must you excel at? (e.g., NVIDIA’s chip design)
R: Realized Value – How do you capture value? (e.g., NVIDIA’s subscriptions)
S: Scope – Where do you play? (e.g., NVIDIA’s enterprise AI focus)

Pair VARS with PESTEL to align internal plans with external realities (e.g., AI trends, regulations). It’s your blueprint for sustainable advantage.

VARS Framework - Deepak Somaya

Tactical Tool: VARS Strategy Scorecard

Assess your strategy’s strength with this scorecard. Answer yes/no:

Is your value proposition clear and differentiated from competitors?
Are competitors catching up to your value proposition?
Do your core activities align with your value proposition?
Are non-core activities consuming too many resources?
Does your revenue model (pricing, sales) maximize profit without losing customers?
Have you analyzed your cost structure for inefficiencies in the last 6 months?
Is your market scope focused on high-opportunity segments?
Are you overextended in low-profit markets or segments?
Have you used PESTEL to scan for external threats or opportunities?
Are your capabilities ready for upcoming market shifts (e.g., tech, regulations)?

Strategy Health Levels:

Health Level	Score	Action
Strong	0-2	Execute with confidence
At Risk	3-5	Adjust focus, refine strategy
Weak	6-10	Overhaul your approach

Assess your setup in just 3 minutes with our interactive VARS Strategy Scorecard! (Coming soon).

The Strategy Playbook: 5 Steps to Operationalize VARS

Turn strategy into action with this playbook:

Step 1: Refine Your Value Proposition

Test with customer interviews—map jobs-to-be-done (e.g., NVIDIA focused on enterprise AI needs).
Track churn and complaints to spot gaps.

💡 Tip: Use customer journey mapping to uncover pain points.

Step 2: Audit Activities, Resources, Capabilities

Audit your ops and org chart—what’s core vs. nice-to-have? (e.g., NVIDIA prioritized chip design).
Identify core competencies (Hamel & Prahalad: customer benefit, hard to imitate, leverageable)

💡 Tool: Outsource non-core tasks (e.g., NVIDIA partnered with AWS for cloud).

Step 3: Optimize Realized Value

List all monetization channels (e.g., sales, subscriptions, upsells).
Evaluate margins—cut low-value activities (e.g., NVIDIA focused on high-margin AI).

💡 Tip: Test pricing against value perception, not just cost.

Step 4: Focus Your Scope

Review performance by segment—exit low-profit areas (e.g., NVIDIA targeted enterprise AI).
Spot underserved niches with data (e.g., healthcare AI).

💡 Tool: Build a segment performance dashboard.

Step 5: Layer in PESTEL Analysis (Quarterly Check)

Use PESTEL quarterly to scan external factors:

Adjust VARS components—e.g., NVIDIA used tech trends to expand into software.

💡 Goal: Fuel your SWOT analysis—Opportunities and Threats start here.

Pitfalls to Avoid:

Overextending scope—growth must be strategic, not opportunistic.
Ignoring external shifts—PESTEL keeps you proactive.

Limitations:

Requires regular customer and market data updates.
May need cross-functional buy-in to execute fully.
Not a one-time fix—strategy evolves with the market.

Bridge to Execution: 5 Steps to Make Strategy Stick

Strategy fails without execution. Use this checklist to translate VARS into action:

Break strategy into 3–5 quarterly priorities (e.g., “Grow enterprise AI sales 10%”).
Assign clear owners, metrics, and deadlines (e.g., “VP of Sales, Q3, +10% sales”).
Build dashboards tying strategy to weekly behavior (e.g., track sales by sector).
Use town halls to reinforce strategy in plain language.
Revisit VARS quarterly—markets change faster than you think.

3 Critical Insights for Smarter Strategy

Clarity Drives Action
NVIDIA’s VARS-like pivot drove $30B in revenue by focusing on AI solutions.
External Realities Matter
PESTEL ensured NVIDIA’s strategy leveraged tech trends and mitigated risks.
Execution Is Everything
Strategy fails without alignment—VARS and execution bridge the gap.

What’s Your Strategy Health Level?

Did you score Strong, At Risk, or Weak on the VARS Strategy Scorecard? Reply or share on X—I’d love to hear how this playbook can help!

Final Thought

Your competitive advantage starts with clarity—about who you serve, what you do best, and how you win. VARS gives you that clarity, PESTEL keeps you alert, and execution makes you a Noble Manager.

Until next time, keep innovating—and keep it noble!

Filippo Esposito
Founder, The Noble Manager

Strategy in Action: Use the VARS Framework to Win